DEMSA update: StepChange is 30 / Data Privacy Day / Consumer Duty / ISO 22458 / AI use by local authorities / Events

Starting on a positive note, congratulations to Lisa Pryde on being promoted to Chief Operating Officer at Debt Support Service.

Congratulations to Ecospend (Trustly). HMRC’s open banking payments via Ecospend has hit £10.5 billion.  The closure of the acquisition by Trustly was confirmed this week. Trustly and Ecospend together become the leading Open Banking payments company in the UK, featuring connectivity with over 80 banks and a reach of approximately 50m consumers.



UK Finance cost-of-living campaign

UK Finance has launched a cost of living campaign to help raise awareness of the support available to customers struggling to make their mortgage, credit card or personal loan repayments. The campaign comprises a range of communication materials across print and digital that their members and stakeholders can use. The messaging focuses on encouraging people to seek tailored support from their lender early on if they need it.

Their summary response to the FCA’s recent guidance on assisting mortgage borrowers affected by the rising cost of living can be found here. It is encouraging that the Vulnerability Academy remains a priority for UK Finance in 2023.


Money Advice Trust (MAT) has reported the continued pressure on consumers with low financial resilience. Whilst the latest UK Consumer Prices Index (CPI) figures published by ONS show that CPI rose by 10.5% in the 12 months to December 2023, it was down from 10.7% in November 2022. Jane Tully, director of external affairs and partnerships at the MAT, said:

“The relentless pressure on household budgets has continued into the New Year and shows little sign of easing. Many households will face tough decisions in the coming months – and with further energy price and council tax rises on the horizon, the situation is set to get harder.”


This week has seen some concerning announcements with regards to staff reductions at StepChange and CAP. This is particularly worrying with StepChange seeing record demand for new debt advice sessions. StepChange has reflected on the impact of the MaPS Lot1 awards in late 2022 and the loss of the grant funding. The leading ‘Fair Share’ providers are looking at alternative funding schemes to cover shortfalls. DEMSA has been engaged in MaPS research around future debt advice funding from 2025. My feeling is that we should be monitoring very carefully what happens from February 2023, especially if the leading free-to-consumer debt advice providers are unable to accept ‘unfunded cases’ from priority creditors like energy providers, where there may be deficit budgets and/or limited unsecured creditors.

Are we going to see wider use of Breathing Space in 2023? I spotted The Debt Advisor link and post by Bev Budsworth on this topic this week. The profile at the end of November 2022 suggested a sustained upturn in volumes. There was a major dip in December 2022. We will pick up the trend with the January 2023 figures when published.


MaPS – Need for debt advice and how households are reacting to changes in the cost-of-living

Their 2022 survey showed that 18% of the UK adult population need debt advice, around 9.3m people.  This is an increase of 800,000 compared to 2021. 22% were ‘at risk’, which is an increase of just over 2% or 1.2m people. The release covers housing tenure, age bands, regions and other key metrics.

Worth a read, but strongly suggests that we need all the help we can get in terms of meeting pent up demand as coping strategies are exhausted and available credit is drawn down by many. Large creditors are wanting to ensure that the ‘lifeboats’ are manned and that they have referral channels that are efficient and reliable, delivering consistent outcomes aligned with the Consumer Duty requirements.


Ofwat and CCW welcome water companies’ efforts to ease cost of living pressures

In October 2022, Ofwat and CCW chief executives David Black and Emma Clancy wrote to water companies setting out their shared expectation that water companies must do more to support a greater number of customers given the current pressures on the cost of living. This included considering how water companies could reduce the impact of inflation on customers’ bills for 2023-24.

Water companies submitted their plans to Ofwat and CCW in December 2022.

They highlight examples of company good practice commitments, which include some water companies:

  • contributing their own money to fund financial support measures and not solely relying on customer contributions
  • working to reduce the impact of inflation on 2023-24 bills, for example by deferring some element of the increase in bills due to inflation
  • working with other utilities, housing associations, local government and charities to raise awareness and increase take-up of social tariffs and other forms of support

Ofwat requires water companies to publish their 2023-24 charges on or before 1 February 2023. Water UK will announce average water bills in early February 2023.



Angel Advance collaborates with InBest

I spotted the post on the Angel Advance and InBest collaboration. The link to the new benefits calculator is below. I am working with a number of debt advice providers at the moment in terms of their Consumer Duty plans around embedding benefits calculators and vulnerability assessments as part of their Consumer Duty activity plans, including competency development for front-line staff.    


It looks like Carolyn Delehanty has been very busy. She has posted that she has been invited by the Customer Experience Foundation to present their CX masterclass workshops on vulnerable customers. Helen Pettifer’s Vulnerability Mentoring Programme starts on Wednesday 1st February and there’s still time to become a member.

Lee Healey of IncomeMax has continued to post positive stories around income optimisation. He has also posted a picture of himself with snooker legend Ronnie O’Sullivan. Probably trumps my picture with Steve ‘Interesting’ Davis from the CSA event in 2021, previously featured on the DEMSA bulletin.

LSB – The rise of alternative lending

According to LSB, the pandemic has ‘cemented’ a mass transition from traditional to alternative finance among UK consumers and SMEs. A perfect storm of circumstances including a pandemic-driven cash flow crisis among businesses, and the rise of fintech and challenger banks, is spurring the rise of alternative lending models. A burgeoning £6.26 billion market in alternative lending now represents a major opportunity for these lenders to meet the evolving needs of their customer base.

DEMSA flagged that significantly more BNPL transactional data is going to become available from Experian and Transunion. LSB has highlighted that BNPL is an alternative lending model experiencing a surge in popularity due to the pandemic and the associated E-commerce boom. This creates opportunities for both consumers and lenders: the seller gets instant payment, increased cart value, higher conversion rates and more footfall; the consumer gets more affordable solutions that increase their purchasing power. However, without any way of knowing the level of borrowing under this product type or affordability assessments, BNPL also presents the risk that vulnerable customers will be overlooked, over commit themselves, fall into financial difficulty or that it will compound an existing issue. Part of the problem is that warning signs of financial difficulty among vulnerable customers can be hidden in seemingly innocuous consumer behaviour, such as use of BNPL for essential spending in supermarkets.

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LSB has recommended that firms should consider working towards best practice standards which can be implemented to help identify red flags in customer data and appropriate customer communication. This could inform a smart, data-driven customer service that anticipates, identifies, and responds to financial difficulties through pre-emptive measures, such as financial education, and reactive measures, such as payment plans, or signposting to third-parties for specialist assistance.


PayPlan is one of nine in the first cohort for ISO 22458 (consumer vulnerability)

BSI has announced the first 9 firms to have achieved certification to the new Inclusive Service Kitemark™ demonstrating their commitment to supporting vulnerable consumers in the Financial Services, Energy and Water sectors. DEMSA would like to congratulate all of the firms. We have been an active supporter since the launch in May 2022 and hope this kitemark will be more widely adopted across debt advice providers, insolvency practitioners and supporting FinTechs as we approach the April 2023 milestone for the FCA Consumer Duty.

Natasha Bambridge, Global Consumer Promise Practice Director at BSI said:

“Amid the cost-of-living crisis, and the growing number of vulnerable adults living in the UK, protecting vulnerable consumers has never been so critical. The Inclusive Service Kitemark demonstrates an organization’s ongoing commitment to offering an inclusive service for all at such a critical time.”

John Fairhurst, Director at PayPlan said:

“As the first debt advice provider in the UK to achieve this certification, we are delighted at this recognition of our work to champion the importance of supporting vulnerable customers and ensuring our debt advice is accessible to all. We are proud of our team’s progress in this area and are committed to retention of the Kitemark and further development of our service to ensure we continue working hard to engage with our customers in the right way, at the right time and provide the very best support possible.”

The certified firms are:

  1. Anglian Water Services Limited
  2. Northern Gas Networks
  3. PayPlan
  4. Power NI
  5. Santander UK PLC
  6. Scottish and Southern Electricity Networks
  7. SP Energy Networks
  8. South East Water
  9. Wales & West Utilities

The Kitemark covers topics such as the identification of customer vulnerability, inclusive design of products & services, as well as the adoption of AI and data collection, protection and sharing to ensure that firms are creating an inclusive service for all.


AiB – Q3 2022 statistics

We featured Q2 statistics in last week’s bulletin in anticipation of the Q3 statistics becoming available this week. Obviously, the volumes of debt remedies relative to England & Wales is proportionality lower and the debt remedies are different. DEMSA has continued to compare outcomes as The Insolvency Service considers a statutory ‘payment in full’ debt solution as an alternative to a Statutory Debt Repayment Plan (SDRP). Many of the responses to The Insolvency Service personal insolvency reform consultation strongly pointed to reducing the cost of applying for bankruptcy. Some Scottish results below are interesting in this respect. We have a number on the circulation that have Scottish insolvency practices or who are continuing money advisers (CMA) under DAS/DPP.     

There were 1,966 personal insolvencies (bankruptcies and protected trust deeds [PTDs]) in Scotland in 2022-23 Q3, 101 (4.9%) fewer than in the same quarter in the previous financial year (2021-22 Q3). There were 574 bankruptcies in Q3, which was a decrease of 10.0% when compared to the same quarter in 2021-22.  PTDs decreased by 2.6% to 1,392 over the same period. 1,807 debtors were discharged in 2022-23 Q3.

When contrasting bankruptcy with England & Wales, it interesting to see that 71.8% of applicants were not required to pay any fee. 490 bankruptcy awards were made following applications submitted to AiB through the revised fee structure. Relative to breathing space in England & Wales, there were 785 applications for moratoria granted in 2022-23 Q3. This was 46 (6.2%) more than the figure of 739 granted in the same quarter in 2021-22.

There were 1,309 debt payment programmes (DPPs) under the Debt Arrangement Scheme (DAS) approved in 2022-23 Q3, compared with 1,102 approved in the same quarter of 2021-22. A total of 440 approved DPPs were completed in Q3, which is a 16.1% increase on the same quarter in 2021-22. There were 283 DPPs revoked in Q3, which is 253 fewer than the figure of 536 revoked in the same quarter of 2021-22.

Financial quarter2021-22 Q12021-22 Q22021-22 Q32021-22 Q42022-23 Q12022-23 Q22022-23 Q32022-23 Q4Q3 vs Q3 change
Approved DPPs under the DAS1,2091,1381,1021,0401,1821,2511,309[x]18.8%
Completed DPPs under the DAS447453379461507520440[x]16.1%
Revoked DPPs under the DAS261332536459467403283[x]-47.2%
Applications to vary a DPP1,7171,9992,2502,9621,9922,0382,306[x]2.5%
of which: Approved – Standard variation1,1901,3731,4162,2621,1631,2091,354[x]-4.4%
of which: Approved – Crisis payment break492587786666766782915[x]16.4%
of which: Rejected35394834634737[x]-22.9%
Applications to revoke a DPP422528794746719753462[x]-41.8%
of which: Approved260331532459465402274[x]-48.5%
of which: Rejected162197262287254351188[x]-28.2%
Amount repaid under the DAS (£ million) [note 10]10.810.711.011.311.312.311.5[x]4.7%
of which: Paid to creditors (after DAS Administrator and payment distributor fees) (£ million)[x]2.0%

StepChange Debt Charity Scotland client data for the fourth quarter of 2022 shows the cost-of-living increase was the leading cause of debt for almost a quarter (23%) of its new clients. This is more than double the figure in the first quarter of 2022 (10%), reflecting the upward pressures people have been facing despite government intervention and other support.

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Energy arrears have continued to rise among StepChange Scotland clients, so much so that in Q4 electricity arrears (36%) overtook council tax arrears (33%) as the most common arrears type held by Scottish clients. Between Q1 and Q4 of 2022, the proportion of clients with electricity arrears rose by 8 percentage points from 28% to 36%.

StepChange Scotland has also seen a slight increase in the proportion of new clients who are homeowners. In Q4 the charity saw the highest proportion of homeowners in 2022, with around one in five (19%) clients being homeowners.




Important changes come in to force on 6 February 2023 following the Scottish Parliament’s approval of the Bankruptcy and Debt Arrangement Scheme (Miscellaneous Amendment) Regulations 2023.

These changes include:

  • Improved access to Minimal Asset Process bankruptcy through the removal of the minimum level of debt required
  • Further action to widen the availability of application fee exemption for bankruptcy including the complete removal of fees for those applying under the Minimal Asset Process
  • More flexible arrangements for payment breaks within the Debt Arrangement Scheme due to issues arising from increased living costs
  • An increase in the deposit that must be paid by creditors where Accountant in Bankruptcy is nominated as trustee in bankruptcy following a court petition

If you need more information please e-mail AiB Policy Development.  


Implementing the Consumer Duty

With 6 months to go until the Consumer Duty comes into force, Sheldon Mills has been reminding firms of the FCA’s expectations in their January 2023 Regulatory Round-up.

Their recent review of implementation plans from a sample of firms shows that while some have extensive programmes of work to implement the Duty properly, others are further behind in their planning and applying the necessary changes. This has mainly focused on larger firms subject to dedicated supervisors at the FCA. Survey work is now likely to focus on smaller regulated firms.

To help firms with their implementation, their review identified key areas for firms to focus on over the next 6 months, gives examples of good practice, and areas where firms may need to improve their approach. Sheldon has encouraged all affected firms to consider the findings and examples in their review and use the time available to ensure you embrace the spirit of the Duty and are on track for implementation.

They recognise meeting these new, higher standards will require a significant effort and the FCA is apparently committed to supporting firms in meeting the implementation deadline. As well as the guidance, information and events already available, they will soon be issuing letters to firms highlighting their expectations. They are hosting Live & Local events for small and medium-sized firms in the retail investment and mortgage sectors, and surveying small and medium-sized firms to understand their progress.

He has reinforced that the rising cost of living makes it more important than ever for firms to deliver good customers outcomes.

The review has highlighted 3 key areas where firms should particularly focus their attention during the second half of the implementation period (to 31 July 2023): 

  1. Effective prioritisation: They have seen plans where it was not clear what the basis was for prioritising some implementation work ahead of other aspects. Firms should make sure they are prioritising appropriately, focusing on reducing the risk of poor consumer outcomes and assessing where they are likely to be furthest away from the requirements of the Duty.   
  2. Embedding the substantive requirements: They have seen plans that suggested firms may have considered the requirements superficially or are over-confident that their existing policies and processes will be adequate. They urge firms to carefully consider the substantive requirements of the Duty, as set out in our final rules and guidance. Firms should ensure that, when they are reviewing their products & services, communications and customer journeys, they identify and make the changes needed to meet the new standards. 
  3. Working with other firms: To implement the Duty on time, many firms need to work and share information with other firms in the distribution chain. They found plans which gave little focus to this area. This suggests some firms may need to accelerate their work on this important aspect of implementation. 

The link below is worth a read. The FCA is now asking firms applying for permission for the first time, and those applying to vary their permissions, to explain how they’ve incorporated the Consumer Duty into their businesses.

A reminder for any principal firms that in December 2022 the FCA issued a mandatory Section 165 (S165) request to principal firms. This request reflects new rules requiring principals to provide more information about their ARs and strengthens the responsibilities and expectations of principals. Principal firms with ARs must respond to this request by 28 February 2023. If you plan to remove your ARs, you need to apply to do this by 30 January 2023 otherwise you are required to submit the S165 on your AR population. The FCA has provided S165 guidance for principal firms to help you complete the request.



UK Finance will be hosting several workshops to help member firms stay on top of the Consumer Duty regulation: Implementing the Consumer DutyFinancial promotionsComplaints and the Consumer Duty Series and Product governance for the era of the Consumer Duty. It is probable that many of the firms engaged by the FCA will have been UK Finance members.

Data privacy Week: “Cyber security is much more than a matter of IT”

Today is apparently Data Privacy Day and Data Protection Day. I spotted this post by FourNet around cyber-security week and how important this topic continues to be as more on the circulation increase their focus on operational resilience and cyber-resilience. A security trend in 2022 was the growth of ‘Security-as-a-Service’. Instead of building up firewall solutions, many businesses are opting to hand over their security to a managed security service provider. This means that a tailor-made solution can be designed according to the needs of the firm and managed by a team of technological experts. Undoubtedly, this aspect of supply chain management would be subject to regulatory scrutiny where it represents a critical service.

Ben Ryland, Head of Public Sector at FourNet, has highlighted a post around cyber-resilience. This points to the NCSC January 2023 ‘Cyber threat report: UK charity sector’. This report is an update to NCSC’s February 2018 “Cyber threat assessment: UK charity sector”.

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Data Privacy Day promotes events and activities that stimulate the development of technology tools that promote individual control over personally identifiable information; encourage compliance with privacy laws and regulations; and create dialogues among stakeholders interested in advancing data protection and privacy. This is DEMSA’s effort today at creating further awareness about the importance of respecting privacy, safeguarding data and enabling trust.

The ICO Tech Horizons Report looks at technologies emerging over the next 2 to 5 years and warns that the significant benefits they offer could be lost if people feel companies are misusing their data. Technology is, however, helping to fill the gap, including automated security systems using AI and machine learning to assist humans in putting up security barriers, searching for hidden threats and reducing costs. There are guides available at the link below and an offer of a free cyber threat assessment.

Just a reminder that that Cyber Essentials technical requirements are being updated. In April 2023, the NCSC and its Cyber Essentials delivery partner IASME will update the technical requirements for Cyber Essentials.

Disturbingly, GBG Group has just issued a press release stating that 8.6m people in the UK have used fake, fraudulent or someone else’s identity in person or online to gain access to goods, services or credit. There has been an increase in crimes of convenience as a result of the cost-of-living crisis (source CIFAS) with people using false information and fraudulent identities to apply for goods, credit and services.






ICO Blog: Addressing concerns on the use of AI by local authorities

Ahead of the VRS virtual event for local authorities on 13 February 2023, the ICO has published a blog around use of AI by local authorities. This seems to have been stimulated by concerns around the use of algorithms in decision-making around benefit entitlement and in the welfare system more broadly. The ICO conducted an inquiry to understand the development, purpose and functions of algorithms and similar systems being used by local authorities. They wanted to make sure people could feel confident in how their data was being handled.

They consulted with a range of technical suppliers, a representative sample of local authorities across the country and the DWP. Overall, 11 local authorities were identified through a risk assessment process to ensure a representative sample based on geographical location and those with the largest benefits workload.

The good news is that the ICO has not found any evidence to suggest that claimants are subjected to any harms or financial detriment as a result of the use of algorithms or similar technologies in the welfare and social care sector. It is their current understanding that there is meaningful human involvement before any final decision is made on benefit entitlement. Many of the providers they spoke with confirmed that the processing is not carried out using AI or ML, but with what they describe as a simple algorithm to reduce administrative workload, rather than making any decisions of consequence.

There are several practical steps that local authorities and central government can take when using algorithms or AI. This may involve key suppliers/partners. Three identified were:

  1. Take a data protection by design and default approach – Data processed using algorithms, data analytics or similar systems should be reactively and proactively reviewed to ensure it is accurate and up to date. This includes any processing carried out by a firm on their behalf. If a local authority decides to engage a third party to process personal data using algorithms, data analytics or AI, they are responsible for assessing that they are competent to process personal data in line with the UK GDPR
  2. Be transparent with people about how you are using their data – Local authorities should regularly review their privacy policies, and identify areas for improvement. There are some types of information that organisations must always provide, while the provision of other types of information depends on the particular circumstances of the firm, and how and why people’s personal data is used. They should also bring any new uses of an individual’s personal data to their attention
  3. Identify the potential risks to people’s privacy – Local authorities should consider conducting a DPIA to help identify and minimise the data protection risks of using algorithms, AI or data analytics. A DPIA should consider compliance risks, but also broader risks to the rights and freedoms of people, including the potential for any significant social or economic disadvantage. The ICO DPIA checklist can help when carrying out this screening exercise

Ahead of Data Protection Day (i.e. today), the ICO encouraged the UK’s 5,501,000 small-and-medium-sized businesses (SMEs) to check they have the right data protection practices in place to help sustain and develop their businesses. A recent survey, commissioned by the ICO, showed 91% of people worried about having their personal information sold to other companies without their consent, and 87% worried about a company losing their personal information.


Consumer Duty Training

The next round of Consumer Duty training commences on 30 January 2023. Kirstie and Heidi are organising and are copied if you are interested. I am looking forward to supporting this Vulnerability Registration Service (VRS) training & development event and to see how far we have come since the training in October 2022. As reflected above, the FCA has continued to communicate their expectations and findings from implementation plans they have reviewed to-date. Surveys now move on to smaller firms and those that have changes planned or in progress with the FCA are likely to have to submit their Duty plan as part of this process.   

Please choose one date from the list below (all £195/person/session or £150/person/session when booking for more than one person from the same organisation):

  • 30 January 2023, 1.30-4.30pm
  • 20 February 2023, 1.30-4.30pm
  • 27 February 2023, 1.30-4.30pm
  • 13 March 2023, 1.30-4.30pm
  • 20 March 2023, 1.30-4.30pm



Citizens Advice is hosting a Cost of Living Briefing on 23 February 2023.

The Credit Union and Community Banking event on 7/2/2023 continues to gather momentum and we are pleased to confirm the participation of 4most and Keith Church providing an economic update as part of this virtual event. Manu from InBest, 4most, IE Hub, Stop Loan Sharks England, VRS and others are supporting the surveys. The DEMSA LinkedIn post is gathering some traction. We are encouraging participation from the debt advice sector.

VRS – Local Authority event on 13/2/2023

On the theme of data sharing amongst local authorities, this important event will feature several case studies, including Kent. The ICO story above may be applicable.

Event link:

I spotted a post by Capgemini around data sharing and AI in the public sector. It was good to connect with Martin Crawford from Capgemini this week.


Online Collections Technology Think Tank 4.1 – Thursday 23/2/2023

I am now speaking in Session 4 for the Credit-Connect event on 23 February 2023. Looking forward to sparring with Chris Warburton as chair. We are covering the cost-of-living challenge and what is the future for digital collections. Chris and I have been exploring the importance of omni-channel and what industry innovations we will see in 2023 and beyond. This links to my 2023 horizon scan circulated at the start of 2023.

Speakers include Jamie Buckley from StepChange and Ian Parry from Utility Collections.


Credit Strategy Credit Summit 2023 – 16/3/2023

I have been asked to speak around Collections Strategies. Venue is the QEII Centre. Roma Pearson is speaking from the FCA. I am on with Sam Challenger, Head of Collections & Customer Experience at Billing Finance.


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